Tuesday, December 11News That Matters

Nigerians Lament Transfer Of TSA Transaction Cost To Payers

Nigerians have deplored the announced plans by the federal government to make them bear the transaction cost of paying into government coffers through the Treasury Single Account (TSA).

Bank customers have described the new TSA tariff regime in which the federal government said it would no longer bear the service charge on all payments to its ministries, departments and agencies  (MDAs) but that they will now be borne by the payer as a disincentive to Nigerians who struggle to pay into government coffers.

Speaking with LEADERSHIP Weekend yesterday, the president of the Bank Customers Association of Nigeria (BCAN), Okechukwu Unegbu, said that passing the charges to customers would be an additional tax burden on Nigerians on behalf of the government.

He asserted that for Nigerians who pay tax to the Federal Inland Revenue Service (FIRS), “paying charges when they are paying taxes is double taxation. It will be like paying tax on tax and it is unfair.

“Even for students who are paying school fees, whose parents have struggled to put together the fees, it is unfair of the government to say they should pay charges. It is unfair and government should know that it is wrong to tell people who are paying to bear the cost. Government is the one making money out of the payments, so it should bear the cost,” Unegbu contended.

LEADERSHIP  Weekend recalls that the federal government had last week announced that with effect from November 1, 2018, the burden for the payment of charges to the TSA of the government domiciled with the Central Bank of Nigeria (CBN) would henceforth be the borne by the payer.

Analysts say that the new tariff regime means that the payments to enrol for the university matriculation (JAMB) examinations, to obtain a driver’s licence and other government transactions had increased from November 1.

According to them, this means that government is abdicating its responsibility of paying the mandatory one per cent charge that goes to the service provider, banks and the apex bank.

LEADERSHIP Weekend reports that in the last three and half years since the implementation of the TSA, in line with the initial contract drafted among the parties involved, it was the responsibility of the federal government, through the Office of the Accountant General of the Federation (OAGF), to pay the technology platform provider, deposit money banks and the CBN.

But in an apparent reversal, the accountant-general of the federation, Mr. Ahmed Idris, said that right from the inception of TSA, the federal government had been bearing the cost of transmission of funds and would not want to do so anymore.

In a statement issued by the director of press, Office of the Accountant-General of the Federation, Mr. Johnson Oise, last Sunday in Abuja, Idris said that the federal government had spent N16billion on TSA transaction costs in two years.

“Within the last two years, government spent almost N16 billion in this direction which, ordinarily, should be borne by those making payments. So, it is time for Nigerians to pay for the services that they receive and government will take whatever is due to it without necessarily incurring cost. In the old tariff regime, the federal government bore the charges on all transactions to the service providers on behalf of payers,’’ the statement read in part.

Idris said a lot of sensitisation had been done to give enough room for Nigerians to understand the new tariff regime and for compliance, adding that the charges were minimal and negotiable.

“By negotiable, I mean by introduction of more players in the market, definitely the charges will come down from whatever they are now, but right now discussions are going on to make the charges as minimal as possible.

“We are liberalising the market and it has to be a level playing field for all operators to operate, and that is what will happen,’’ he said.

The AGF further noted that the Central Bank of Nigeria, as the regulator which stipulates the rates of the charges, would always intervene if any service provider charges beyond the approved rate.

However, sources said that if government is trying to shift the responsibility of paying the service charge to those that initiate the transfer to the TSA account, then government must be ready to go the extra mile by providing different alternative channels for the payment of TSA, to enable the payers have the opportunity to choose among the available payment channels based on their service charges.

The source, however, urged the government to pay the 22 months outstanding service charge to SystemSpecs and the banks.

Meanwhile, some keen industry watchers have commended the TSA as a way to curb revenue-related corrupt practices in the MDAs.

After years of foot-dragging over the adoption of TSA by the MDAs, the president’s order was seen as the impetus MDAs needed to adopt TSA. Now all government revenues, incomes and other receipts will go into TSA with the CBN.

“The president’s pronouncement will significantly affect the volume of liquidity in the banking sector but it would curb corruption. Besides, TSA will promote transparency and facilitate compliance with Sections 80 and 162 of the constitution”, a source at the CBN said.

Investigation revealed that TSA has helped the government to block leakages and uncover idle cash. TSA would also allow complete and timely information of government cash.

Agencies such as the CBN, Securities and Exchange Commission (SEC), Corporate Affairs Commission (CAC), Nigerian Ports Authority (NPA) and the Nigerian Communications Commission (NCC) have adopted the TSA.

Other agencies affected by the presidential directive include the Federal Airports Authority of Nigeria (FAAN), Nigerian Civil Aviation Authority (NCAA), Nigerian Maritime Administration and Safety Agency (NIMASA), Nigeria Deposit Insurance Corporation (NDIC), and Nigeria Customs Service (NCS), Nigerian National Petroleum Corporation (NNPC). Federal Inland Revenue Service (FIRS) and the Department of Petroleum Resources (DPR).

Recently, at the eNigeria Conference, organised by the National Information Technology Development Agency (NITDA) in Abuja, President Buhari revealed that the implementation of TSA was saving the country a total of N24.7 billion per month.

LEADERSHIP Weekend reports that the TSA is a platform used by the federal government to unify all its accounts by ensuring that all monies belonging to it are kept with the CBN. It is a bank account or a set of linked bank accounts through which the government transacts all its receipts and payments and gets a consolidated view of its cash position at any given time.

It would be recalled that a treasury circular of August 7, 2015, had directed all ministries, departments and agencies of the federal government to transfer their cash balances to a TSA account created at the CBN. Since the commencement of the TSA in September 2015, over 20,000 accounts with Deposit Money Banks belonging to federal government’s MDAs were closed and N5.24 trillion was moved into the TSA.

About 20,000 accounts scattered in banks in Nigeria and overseas were consolidated into a single account. It generated a balance of N3 trillion by May 2016 and jumped to N4.36 trillion six months later before growing to N5.224 trillion.

Over 100 MDAs saddled with the responsibility of overseeing government’s functions in various sectors such as communications and media, economy, energy, intelligence and others were mandated to adopt the TSA after President Muhammadu Buhari’s announcement.

At commencement, all players, including all commercial banks, SystemSpecs and the CBN, agreed that a fee of one per cent of funds collected is payable as transaction cost.

President Buhari had pushed the MDAs to adopt the TSA because of poor tracking of internally generated revenue (IGR) and other collections as well as leakages of government revenue and inflows. Other reasons for TSA implementation were the non-remittance of revenue by collecting entities, misappropriation of revenue, collections, inadequate and out-right lack of records by the MDAs.

At a seminar organised by the CBN and the Office of the Accountant General of the Federation (OAGF) from May 27-28, 2013, Systemspecs had proposed a commission of 1.5 per cent, commercial banks proposed five per cent, while a committee set up by the CBN and the OAGF proposed 2.5 per cent.

Eventually, all the parties agreed on one per cent commission, with the sharing formula as: platform owner/Systemspecs, 50 per cent; collecting agents/banks, 40 per cent; the CBN: 10 per cent.

Systemspecs Ltd, Nigeria’s foremost software company, developed the Remita electronic payment platform TSA collections. The Remita platform was adopted by the CBN for the payment and collections of funds on behalf of the federal government and used by all 22 commercial banks and over 400 micro finance banks. It has significantly assisted to revolutionise the e-payment industry in Nigeria.

Payment Gateway Adjusts To New Directive

Consequently, as the TSA new tariff model commenced on November 1, the management of Systemspecs, operator of Remita, has assured Nigerians that the company would continue to deliver the seamless quality of services associated with it.

With the new model, all funds and revenue collection into the TSA would require the payers to bear the transaction cost. As such, the new model would therefore replace the previous arrangement where the merchant, in this case the federal government, was paying the service charges on all transactions to the service providers, on behalf of the payers.

MD/CEO of SystemSpecs, John Tani Obaro, said the company had already complied with the federal government’s directives, as such the payment system has been “adjusted to seamlessly and transparently migrate” to the new tariff regime.

Obaro said: “We are committed to satisfying all the stakeholders in the TSA scheme, particularly corporate organisations and individual Nigerians who use our platform for payment to MDAs. We are assuring the payers of seamless quality of services as well as transparent charges in line with the new regime.”

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